Direct marketer Velo taken over by secured lenders

Published 7:41 pm, Wednesday, February 6, 2013

Bloomberg News

Velo Holdings Inc. implemented the bankruptcy reorganization plan on Feb. 4 where first-lien lenders took ownership of the direct marketer in exchange for debt. The bankruptcy court in New York approved the plan in a Jan. 23 confirmation order.

Second-lien creditors owed $210 million came away with nothing. Unsecured creditors owed $36 million carved up $375,000 for a 1 percent recovery.

First-lien lenders received the new stock with an expected value ranging between $30 million and $40 million, according to the disclosure statement. In addition, senior creditors were given a new $80 million term loan payable in five years with interest at 15 percent.

The lenders' recovery is supplemented by $20 million that was transformed into a post-bankruptcy secured loan and $75.5 million in payments made on secured debt during bankruptcy.

The petition by Velo listed assets of $348.4 million and liabilities totaling $713.3 million. Velo markets a variety of products such as credit and identify-theft protection and insurance. Revenue in 2011 was $486 million.

Velo was acquired in 2007 by One Equity Partners II, which owned 79 percent of the Class A common stock and all of the preferred stock.

When the Chapter 11 case began, there was $22 million on a revolving credit and $351 million on a term loan owing to first- lien lenders with Barclays Bank Plc as agent. Wilmington Trust was agent for second-lien lenders owed $200 million.

When the bankruptcy began, first-lien lenders intending to purchase the business were disclosed as including General Electric Capital, Goldentree Asset Management, Chase Lincoln Financial and Barclays.